Conclusions

This chapter provides an overview of the analysis developed throughout the book. It contends that the Bank of England employs tail risk calculations to shape the expectations that regulated banks have around the central bank’s new macroprudential approach. The chapter highlights the practical and political limitations of this approach. It then reiterates the argument that recent efforts to capture climate tail risks are attempts to shape expectations around potential losses relating to the pace of transitions to a sustainable economy. The chapter argues that the identification of physical tail risks reveals opportunities for private profit within the financial system and provides a critical discussion of the role that the shadow banking system is likely to play in managing climate transition risk. It brings the book to a close by reflecting on questions of climate justice raised by the geographic distribution of climate risks.